Selectboard approves transportation impact fee hike11/26/08

Levy to pay for road improvements

Nov. 26, 2008

By Greg Elias

Observer staff

The Selectboard has approved a scaled-back transportation impact fee that still more than doubles what developers pay to fund road improvements.

The fee will rise from $300 to $707 for each new single-family home in Williston. But the hike is only a fraction of the originally proposed $2,824-per-unit fee that would have funded a wide range of road construction projects to cope with the town’s rapid growth.

That proposal, based on a consultant’s study and a Planning Commission recommendation, was scuttled after developers protested and the Selectboard balked. The board was concerned that such a drastic increase would drive up housing prices that critics say are already out of reach for many area residents.

The lower fee will cover only a fraction of all of the town’s development-driven transportation needs, said Planning Commission Chairman David Yandell. If the millions of dollars in road improvements — which include adding grid streets around Taft Corners and widening the Interstate 89 interchange — are ever completed, existing residents and businesses will have to make up the difference through their property taxes.

“I don’t think we had anywhere near the right numbers as far as the real cost of improvements,” Yandell said. “The only question is who is going to pay.”

The transportation levy is one of three impact fees the town charges developers. In addition, the town has school and recreation fees that are also intended to defray the cost of adding classroom space and recreation facilities. In all, impact fees total more than $12,000 for each single-family home.

A study by Mike Munson, a former Williston town planner, and the consulting firm Resource Systems Group found the town would need a nine-fold increase in the existing transportation fee to fund millions of dollars in road improvements.

State law requires impact fees to be used only for infrastructure needs directly attributable to new development. Fees collected must be set aside for their intended purpose and used within six years.

Developers, including representatives from Snyder Companies, which plans to built 356 units of housing as part of the Finney Crossing project near Taft Corners, protested the fee hike was too high at a Planning Commission hearing earlier this year.

“We heard from some major developers, and what we heard is that they didn’t think it was possible to absorb that,” Yandell said.

The developers said the increase would simply wind up being paid by new homeowners.

Impact fees and other costs of development drive up the cost of housing, said Joe Sinagra, executive officer for the Home Builders and Remodelers Association of Northern Vermont.

He said the permitting costs, which include impact fees, have risen by 242 percent in the past decade. And he pointed to a report by the Vermont Housing Awareness Campaign that shows new homes are already too expensive for many residents.

It took an annual household income of $103,000 to afford the median-priced new single-family home in 2007, according to the report. The median household income in Vermont is $51,622.

It is a myth that builders can absorb impact fees and other permitting costs, Sinagra said. In good times, builders can make a 10 percent profit. In a tough market like the current one, that margin evaporates.

“Builders have to pass permitting costs on to potential buyers,” he said.

The Selectboard was also worried about driving up housing costs. Board member Jeff Fehrs said during a meeting last year that he had “sticker shock” from the original proposal. The board directed the Planning Commission to reconsider.

The fee approved by the Selectboard on Nov. 17 includes provisions for affordable housing. Units designated as perpetually affordable are eligible for a 50 percent fee reduction.

Town officials say a large hike in the transportation impact fee was needed because it had not been increased in many years. The fee was enacted in 1987 and last changed in 1999.

Ken Belliveau, Williston’s planning director, said setting impact fees is a “balancing act.” If fees are too high, it makes new commercial and residential development unaffordable. If fees are too low, existing property owners must foot the bill for infrastructure needs created by newcomers.

Yandell also acknowledged a balance, adding that fee hikes are subject to the law of unintended consequences. In this case, that meant a too-steep levy may scare away potential developers and actually dry up revenue.

“It’s not Williston’s intention to make things any harder than they have to be for any of these developers,” he said.

Impact fee rundown

The town of Williston charges developers impact fees totaling more than $12,000 for each single-family home. The breakdown:

Transportation impact fee

$700 per peak-hour trip end. That equates to $707 for a single-family home and $546 for multi-family dwellings. Commercial development also pays the fee, which is calculated based on the amount of peak-hour traffic it generates.

School impact fee

$10,838 for single-family homes; $3,649 for multi-family units. The fee only applies to residential development.

Recreation impact fee

$840 for single-family homes; $667 for multi-family units. Again, the fee applies only to residential development.